U.S. Dollar Treads Water as Geopolitical Concerns Weigh on Investor Sentiment

Wall Street largely appeared to shrug off the threat of instability in the Middle East on Monday as U.S. stocks registered strong gains by the closing bell. In premarket trading Tuesday, April 17, futures pointed to a strong open, too.

But the U.S. dollar didn't keep pace with equities. On Monday, April 16, the dollar index fell 0.42% to 89.43, its largest single-day percentage decline since March 26. Monday's retreat snapped a two-session winning run for the index, which weighs the greenback against a basket of six other currencies.

In early morning action on Tuesday, the dollar index looked to regain some lost ground, up 0.04% to 89.46. In the 11 trading sessions that have come and gone in April, the dollar index has been lower for seven of them. The index has declined about 1% in the last month and is down about 10% for the last year.

Source: FactSet

Traders appeared to have labeled this weekend's airstrikes in Syria by U.S., British and French forces an isolated event. But the worsening relationship between the U.S. and both China and Russia has weighed on investor optimism.

President Donald Trump on Monday morning tweeted that Russia and China are engaging in a "currency devaluation game."

Russia and China are playing the Currency Devaluation game as the U.S. keeps raising interest rates. Not acceptable!

While a weaker dollar may present some concern domestically, it can offer a boost to multinational corporations that earn a large portion of their profits overseas. Stronger overseas profit margins could mean solid returns for companies that do a significant amount of business overseas but retain a large portion of production in the U.S., including Procter & Gamble Co. (PG) , McDonald's Corp. (MCD) and Action Alerts PLUS holding PepsiCo Inc. (PEP) .

The stock market moved higher Tuesday amid a stabilization in the Turkish lira, but TheStreet's founder and Action Alerts PLUS Portfolio Manager Jim Cramer urged investors not to get ahead of themselves.

With everyone screaming "Turkey" and "contagion" in the same breath, we called in an expert to get all your answers and calm your nerves. And most importantly, make sure your 401(k) will be ok. So listen now!